In my line of work, which is advising folks who need debt help, I've learned that life can be brutal, but, (and this may be surprising to some people), bankruptcy need not be. I figure, who better to debunk all the myths about bankruptcy law but a group of Indiana bankruptcy attorneys with years and years of experience and tens of thousands of families helped?

Being a guy who still values old-fashioned client service but who tries to keep up with technology, I decided blogs would be just one more very cool way to get the message out to people in Indiana who need to hear it. I want my blog to reach people in Indiana who know they need to do something about their debt situation. There are folks out there who need to know more about what bankruptcy is and what it isn't. I want to reach people who have too many bills to pay, bill collectors bothering them, people who need to know the answer to the question, "So what am I going to do about it?" I want my blog to reach people who might be facing foreclosure on their home. I want my blog to help those folks learn that sometimes declaring individual bankruptcy is the best course of action, and that sometimes declaring bankruptcy might not be such a great idea.

I figure that a blog is an informal, very personal way for me and the other bankruptcy attorneys who work with me to deliver information and invite feedback in the form of comments and questions.

Personally, I'm hoping that I'll be able to get across some of my ideas about how clients who need debt help should expect to be treated, and how important I know it is to just listen to people when they need to talk about their business or their family or their health problems. So, I'm going to be here blogging, debunking, explaining, and helping. I hope you'll be here, too...

Harvard's most popular class isn't on law or business; it's a class on happiness.  Tal Ben-Shahar, author of the book "Happier", teaches the positive psychology course, based on research done by Harvard in partnership with the University of British Columbia. The studies show that, unless people are so extremely poor that each extra dollar would make an enormous difference in their lives, getting more money generally doesn't lead people to have more positive feelings.

One of many books written on the subject, Sonya Lyubomirsky's "The How Of Happiness" explains this effect by observing that people tend to be made happy by experiences rather than by possessions.

In my work as a consumer bankruptcy specialist for longer than two decades, I've made my own study of the mutual effects of money and happiness.  It's obvious that, for individuals who are consulting an attorney in my field, that experience is hardly one of the high points of their lives.  In fact, many are near-exhausted from stress, nearing the last stages of a long struggle to "keep things together" for themselves, their families, and, often, for their businesses.  As I described in an earlier blog, Bankruptcy Blog Shares Message With The Oprah Show, I try hard to convey two messages to my clients: "You are not alone!" and "Help is here!"

It's interesting that the British Columbia/Harvard study was mentioned in last month's issue of the Journal of Financial Planning.  College students surveyed ahead of the study thought extra money would indeed add to people's happiness.  But the study itself revealed that people who shared the money with others proved to be happier than those who spent it on themselves.

My own "fix" on these study results is this:  Many bankruptcy clients suffer from feelings of embarrassment and shame as we discuss foreclosure, bankruptcy, and business failure.  These clients are focused on their own feelings.  Everyone else, they think, will pity them or look down on them, so they feel isolated from others.  I know that focusing on others will help them heal.  And, while these clients have no extra money to share with others at this point in their lives, they can share their time and their affection and friendship.  I try to turn their attention away from themselves and their immediate problems, and have them focus on the fresh start they'll be making towards their future as they emerge from bankruptcy.

Just last month, the Pew Charitable Trust announced a new project.  The goal – to promote bank accounts for moderate-to-low income households.  Pew wants to help new, young depositors get started in banking, as well as people who’ve had trouble affording bank fees, stay away from check-cashing establishments and stop taking out payday loans.

In an earlier blog, Who Really Gets Paid On Payday Loans?, I explained that these loans are extraordinarily expensive for borrowers.  The Pew study estimates that “alternative financial services businesses”, including check-cashing establishments and payday lenders, are estimated to charge full-time workers an average of $800 per year in interest and fees, (often on a rotating balance not more than that number!).

As a bankruptcy attorney and consumer bankruptcy specialist for close to twenty five years in Indianapolis, I applaud the Pew effort.  Promoting safe financial services is more important than ever today. I see that people are having trouble covering food and gas prices and can’t spare money for fees to cash their paychecks!   In my bankruptcy law offices, I deal with people’s income and expenses every day.  One important part of my work in helping clients prepare to file bankruptcy through the Indiana court system is to assist them in organizing all their financial records, showing all their income and each category of expense.  Overall financial counseling and specifically debt counseling are an everyday aspect of my interaction with people in my four bankruptcy law offices.

I always advise people, when they pass signs advertising payday loans, to drive on by.    Once the Pew Safe Banking Opportunities Project is complete, I’ll be able to add, “Keep driving all the way to the bank!”

With one of my four Indiana bankruptcy law offices located in Columbus, I'm keeping a very close eye on news about the awful flooding there.  In earlier blogs I observed that, for families and individuals financially squeezed by job layoffs, divorce, or medical illness, flood damage could very well push them over the financial edge.  Matters are very serious, indeed in Columbus, Indiana.  However, some hopeful news has started to filter out of this hard-hit area.

Columbus Regional Hospital sustained no less than $25 million of damage, and will be closed for the next couple of months.  Still, hospital officials announced, it will continue to pay its employees.

Flood victims have begun receiving money and even debit cards through the Red Cross to help them buy supplies, food, and clothing.  Salvation Army and many other nonprofit organizations are helping as well.  The Indiana Bureau of Motor Vehicles is working with car owners whose records were lost or destroyed, and insurance companies are under by the state to extend the grace period for payment of premiums before cancelling coverage. 

FEMA (Federal Emergency Management Agency), a division of the U.S. Department of Homeland Security, offers assistance for basic needs not covered by insurance.  SBA (the Small Business Administration) offers low-interest disaster loans to help homeowners, business owners, and even renters restore or replace destroyed property.  Some of this aid needs to be repaid, most does not.

Even with all this help, for some individuals and families, it won't be nearly enough.  When too many negative factors pile up and impact someone's financial situation, and then flooded property is added to the mix - sometimes the only recourse is to use the safety net of the Indiana bankruptcy system.

There is one very important and very reassuring fact about FEMA help.  Money received from FEMA cannot be counted as an asset or as income in bankruptcy.  That means FEMA money cannot be directed by the court to pay creditors.

So, as water levels go down, hopefully things will begin to look up in Columbus, Indiana.

Since one of my Indiana bankruptcy law offices is located in Bloomington, I was particularly interested to read an Indianapolis Star editorial by Nate Feltman, Indiana Secretary of Commerce about the Cook Pharmica company centered in Bloomington.  Cook, a biotechnology company, has doubled in size, creating many hundreds of new jobs in our state.  This is partly the result of Governor Mitch Daniels' efforts, through the Indiana Economic Development Corporation, to "aggressively seek new job-creating investment in the life sciences," explains Feltman.  In addition to Cook Pharmica, a number of other life sciences companies have made thousands of new job commitments around our state.

In earlier bankruptcy blogs, I've explained that, as a bankruptcy lawyer in Indiana, I am vitally interested in our job market.  First of all, job loss is one of the leading factors in bankruptcy, Then, after the bankruptcy process, when my clients are working to rebuild their financial lives, it's crucial that they be able to qualify for what Gov. Daniels calls the newer "high-skill, high promise" jobs.  Of course, life sciences business in our state can lead to many other aspects of increased business.  As Cook Pharmica continues to expand its employee force, for example, there will be more people who have the money to eat in the local restaurants and purchase all kinds of products and services.  The entire area could feel the benefits of the success of this one major local company.

For clients filing Chapter 13 bankruptcy, their ability to qualify for higher paying jobs will be an especially important factor in their success.  That's because, a Chapter 13 bankruptcy involves a repayment plan.  The individual who has filed bankruptcy commits to a system of payments to creditors, spread over a number of years, under court supervision.  Having a regular, above average income will make this repayment plan easier to complete.  Once the repayment plan has been fulfilled, the debtor truly has the opportunity for a fresh financial start.  Directly or indirectly, life sciences business in Bloomington could be the beginning of a new life for many Bloomington debtors.

In my earlier blog, In Bankruptcy, Forgiveness Means More Than Discharging Debt, I talked about the technical meaning of forgiveness in bankruptcy and in tax law, versus the kinds of human forgiveness that are so needed in order to families and individuals to emerge after the bankruptcy process ready to rebuild their lives. As a bankruptcy attorney for many, many years in Indiana, I mentioned that while there may be a lot of the technical type of forgiveness going on around bankruptcy courts, what I would really like to see is more human forgiveness going on around bankruptcy clients, and around their friends, their families, their associates, and themselves. 

In a recent Reader’s Digest issue, I read a short article called “Gender Mind-Benders”.  Part of this article discusses what the writer calls “Forgiveness 101”, and it makes the point that men and women behave differently when it comes to grievances.  “Guys tend to focus on who did what, and they’re more interested in revenge and justice… Women are oriented towards community (how can we all get along) and therefore are more likely to kiss and make up,” the author explains.

In my bankruptcy law offices I see a lot of grievances being held and a lot of blame being slung about.  Generally speaking, I do notice some of the gender differences the article mentions.  But whether the clients are male or female, I see more similarity than difference in how folks react to their debt situation. Bankruptcy clients are under severe strain, as you might imagine, and the tendency is to put blame on everybody and everything: the spouse, the ex-spouse, the parents, the children, the business partner, the war, the weather, the government, and yes, even the lawyers and judges.  Worst of all, people put blame on themselves.

While I know why this is happening, I also know that for these clients, the secret to rebuilding their lives is going to involve letting go of blame and moving forward.  Blame acts like a boomerang – in the final analysis, blame hurts the blamer most of all.  As their attorney, I can guide them through the process of getting back on their feet financially.  But then, they have to live with – themselves!

I would’ve liked to have been a fly on the wall at the United Nations building last month…
.
As a bankruptcy attorney in Indiana these many years, I deal every day with asking the court to discharge debts.  The way the Indiana bankruptcy court functions, in addition to supervising the repayment of debts and overseeing the process of selling a debtor’s assets to pay creditors, the court can rule that certain debts are forgiven, or “discharged”.  During the process, there is an “automatic stay” in effect that prevents creditors from making any collection efforts or even contacting the debtor.  Well, last month, Iraq appealed to the United Nations to have nearly one hundred billion dollars worth of its debt “discharged”.  This appeal was made before nearly 500 delegates to the U.N.. 

Unlike the kinds of business and personal debts I deal with every day in my work as a bankruptcy lawyer in Indiana, the debt owed by Iraq is owed to countries (mostly to Arab nations), rather than to individuals or companies or to the IRS.  Most of Iraq’s debt was incurred during the regime of Saddam Hussein.  Two thirds of this money is owed to Saudi Arabia, the United Arab Emirates, and Qatar, with the remaining third of the debt owed to Kuwait because of Iraq’s 1990 invasion of that country. Well, the creditor countries aren’t buying into this “discharging” of debt” idea.  While many Western nations have forgiven Iraqi debts, Iraq’s Arab neighbors are apparently fearful of the Iraqi government, and don’t want to make things any easier for that feared regime.

Needless to say, in this situation there’s no Indiana bankruptcy court judge with the power to help Iraq out of its dilemma, and the appeal to the U.N. member countries apparently fell totally flat.  Without appearing in any way to boast, I can’t resist noting that my appeals on behalf of my Indiana bankruptcy clients are typically more successful in the Indiana bankruptcy court system than Nouri–al-Maliki’s were at the United Nations!

In several earlier bankruptcy blogs, I explained that one of the reasons I am such an avid reader of business and economic news has to do the job situation in Indiana. First of all, job loss is one of the big three factors that lead to bankruptcy.  Sometimes individuals or families are already stretched thin financially.  Perhaps it’s because of medical expenses or divorce.  Perhaps, along with those factors, their mortgage rate has just reset and their monthly payment is much higher.  Or perhaps their property was hit with the awful flooding we’ve had in the southern part of the state.  On top of one or more of these bad things, if they’re laid off from work, it can overwhelm the most financially responsible people.  Since I live in the state of Indiana and practice bankruptcy law here, I’m particularly alert for stories that have to do with the automotive industry, which has been such a central part of the Indiana’s economy.

While headquartered in Detroit, GM has, over the years, provided thousands of jobs for Indiana workers.  Just a few weeks ago, as I mentioned in Bad News Can “Wheel” Better News To Indiana, I caught a good news piece about the fact that one of GM’s Pittsburgh plants is closing, and GM is moving equipment from there to a stamping plant here on the west side of Indianapolis, possibly saving the jobs of the 900 workers there.

Then, just about two and half weeks ago, GM announced that a quarter of its U.S. hourly workers,  19,000 people, have agreed to take the company’s buyout offer or early retirement offer.  These workers will all be leaving by next week!   Now the company says it may hire up to 16,000 non-assembly workers at half the old wage (which was $28 an hour).  All three big auto companies have been restructuring their work force.  A month ago 4,200 Ford Motor Company hourly workers accepted buyout offers, and more offers are being made by both Ford and Chrysler. 

It’s interesting that each of these items could present both good and bad news to individual workers.  As I mentioned above, with already overstretched finances, many families will be dealt a terrible blow by having a breadwinner being laid off work.  On the other hand, lower paying jobs are opening up that can provide income for people who are now out of work altogether.   The ability for one of my bankruptcy clients to get a new job after a layoff, or for a single parent to re-enter the work force following a divorce, the process of re-establishing credit  after a bankruptcy – all these things depend on a healthy job market in our state. I advise everyone to get as much training as possible, to be flexible, and to stay hopeful.

You know how some of the jokes in Reader’s Digest aren’t very funny, but are still very true?  Here’s one that has some humor to it, but, more important, I think it offers some very good financial advice.  This advice is certainly well-suited to my Indiana bankruptcy clients as they complete the bankruptcy filing process and begin to rebuild their financial lives.  In some cases following this very good advice could help clients stave off foreclosure on a home or even help them avoid bankruptcy.  Actually, this is advice all of us should follow.

 Here’s the joke:  A rich, miserly old man on his deathbed informs his wife he wants to take all his money with him.  He instructs her to put all his money in the casket with him when the time comes.  At the funeral, the widow’s best friend sees the widow put a metal box in the casket.  “Surely you didn’t put the money in there!” exclaims the friend.  “I did promise him I would”, said the widow. “So I got the money together, deposited every penny in my account, and wrote him a check.  If he can cash it, he can spend it!”  (See what I mean about the story not being very funny but, at the same time, having a lot of truth to it?)

In working as the attorney for tens of thousands of bankruptcy clients around the state of Indiana over a period of two and a half decades, one thing I’ve noticed is that many of them hadn’t been using a checking account at all, but were instead paying for expenses and purchases with credit cards, debit cards, or cash.  Nothing wrong with that, but I can’t help thinking that, no matter how you pay for things, it would be a good idea to keep a “check register” for each credit or debt card, and even for the cash you allow yourself to spend each month.  Having two or three small notepads (one for each account) small enough to fit into a man’s pocket or a lady’s purse would do the trick.  The big thing about noting down each expenditure is that it reminds you how much you’re spending.  That way, you’re less likely to go over your limit.. Say you have a Mastercard with a credit limit of $3000.  Every time you use that card, subtract that amount from your “balance”.  When the MC statement comes and you’re paying it (hopefully all of it, but at least some) with a check or money order or bringing cash to the bank, cross off all the charges you’ve covered in your little MC notepad. That way, you always know where you are with your spending. 

Remember, the Indiana bankruptcy system is a safety net to help people who’ve been overwhelmed by events beyond their control (job loss, prolonged or disabling illness, divorce, natural disasters) get back on their feet.  Once that’s achieved, just like with all of us, people have to learn to practice responsible financial management. So the rule in Reader’s Digest is really a good one:  If you can cash it (meaning you have enough money to pay for it, even though you you don’t have it on you in cash), you can spend it.  Otherwise, maybe hold off on that purchase until you’ve saved up for it….. Truly, I'm not joking.

As I brought out in an earlier blog, Foreclosures Hit Even The Famous, even folks who were at one time very successful and wealthy have fallen on hard times.    I’ve been practicing bankruptcy law for close to twenty-five years, and one thing I’ve found is that, by the time clients come to see me to try to stave off foreclosure or to file a bankruptcy case for themselves or for their small business, they are under considerable strain.  They’re not feeling either healthy or energetic, and one of the reasons for that is they haven’t been sleeping well.    Having counseled with tens of thousands of debtors, I have a lot of empathy for the enormous burden of worry people feel, knowing that it’s keeping them up at night and hurting their health. 

That’s why I was very interested in a May 23rd feature in the Travel section of USA Today about hotels.  Marketing managers at hotels are coming to realize that, while a hotel can have great amenities, what they’re really all about is a great night’s sleep. Several resort hotels and spas are focusing on helping their guests achieve just that.  At a special suite at the Hotel Monaco in Chicago, guests can find neck pillows, bamboo sheets, sleep masks, a gentle waterfall, and a sound machine.  The Four Seasons Hotel Westlake Village near Los Angeles launched a “Sleep Well” program, with acupuncture, meditation sessions, ear plugs, foot warmers, and even teddy bears.  SpaTerre at La Playa Resort in Naples, Florida, adds a sunset beach ritual and relaxation massage sessions.  The manager there advises guests to lock their cell phones in the safe and check email no more than once daily.  At Kimpton’s 70 Park Avenue hotel in New York City, guests can call a “pillow librarian” to request one of 15 different types of pillows to induce rest, such as one filled with buckwheat hulls that’s supposed to stimulate acupressure points.

As I work with my clients, preparing to guide them through the bankruptcy court process or helping them negotiate with home lenders and other creditors, I help them understand the options that apply in their situation.  The clients, in turn, need to make some very critical business and personal decisions.  They’re trying to absorb new terminology: Chapter 13, Chapter 11, Chapter 7, short sales, deed in lieu of foreclosure, on and on.  At the very simplest level, clients need to locate and organize all their financial records.  In short, there’s a lot to handle. If ever there was a time for focus and sharp thinking, this is it.  But, without sleep, nobody can get focused.

As a bankruptcy attorney for so many years, I know that when it comes to bankruptcy, it’s the “Now what?” stage that really matters.  That’s the part where the clients put the legalities of bankruptcy behind them and begin to rebuild their lives.  But, in order to get to that more hopeful “Now what?” stage, my clients must muster all their strength to get through the “Now”.  Perhaps, along with all my law books, I should stock a “pillow library” in each of my four bankruptcy law offices.

I've mentioned often in this bankruptcy blog that the three main factors leading to bankruptcy are extended medical illness, divorce, and job loss.  The combination of two or more of these things hitting a family at the same time can destroy even carefully laid financial plans.  In recent weeks, with actual flooding caused by thunderstorms and tornados in many parts of Indiana, many Hoosiers' already shaky finances have been totally devastated.  Although, as a bankruptcy lawyer in Indiana, I have been helping clients for more than two decades, I can hardly remember a time more difficult than the one we're experiencing right now.

Churches and synagogues are donating food, clothing, and household supplies.  Corporations are contributing money.  President Bush has approved many counties for eligibility for federal assistance, and more approvals are expected.  What this means is that homeowners and business owners, and even renters can apply for grants to pay for temporary housing and for repairs. 

Since my Indiana bankruptcy law practice includes 68 counties, I was encouraged by the speed with which this federal assistance has become available.  At the same time, I know that many individuals and owners of small businesses were already experiencing a severe financial squeeze because of the three factors of medical costs, divorce, and job shakeups.  The additional burdens created by the storms and flooding might prove, at least for some, just too much to withstand. 

Folks who planned to make use of a short sale of their home or to negotiate a "deed in lieu of foreclosure" strategy (see my earlier blog, Going, Going, Gone On Home Foreclosures) will not be able to offer their property for sale or to satisfy the lender until the repairs on the property are completed.  In short, many of the ways in which I help clients "buy time" to make decisions about foreclosure, personal bankruptcy, or business bankruptcy will not be feasible when property has sustained extensive damage or worse, been completely destroyed. 

It is very, very sad for me to see people and businesses being so hard hit.  But I know that my sympathy is not the most important thing my clients need from me now. In a way, my situation is very much like that of a doctor who feels enormous empathy for his or her patients.  But the doctor must focus, not on his or her own feelings, but on administering first aid, and then on working to facilitate the healing process.   I know that as a legal and financial adviser, there are many strategies I need to discuss with my clients.  There are important steps they need to take and important decisions they must make in order to get their finances back on track.  And, as with first aid, some of these steps need to be taken right away.  Once a plan is in place, I can help my Indiana clients "work the plan" and "dry out after the flood". 

In a story I read about the super-rich in U.S. News And World Report, the writer points out the differences between being rich today and being rich a thousand years ago.  Back then, the article explains, ".being rich involved very little money per se.  A person's wealth was calculated in land, slaves, chunks of gold, and jewels. Today, by contrast, wealth is almost always expressed in terms of money."   It's true, I realized.  We refer to rich folks as millionaires and to the very rich as billionaires, meaning how many dollars' worth of assets they have.

To me as a bankruptcy attorney in Indiana who deals every day with lists of assets and with dollars owed, the most fascinating part of the article was about how, nowadays, if you're a millionaire, "you could be anybody."  You might be a CEO of a corporation on the verge of bankruptcy.  Or, you might be a professional athlete or rock star.  You might have inherited your money, or won it in a lottery or on a TV game show.  Since there are more than four million millionaires in the United States, they represent a variety of paths to wealth.

I couldn't help thinking that, at the opposite end of the money spectrum, it's the same situation, but in reverse.  Bankruptcy filers might be people who consistently lived beyond their means and never "saved for a rainy day," But filers might just as well be families who were very careful with their money and then were hit with tremendous medical costs, perhaps in combination with a job loss that meant health coverage was lost.  The person filing bankruptcy might be a brave, hardworking entrepreneur whose small business just couldn't withstand all the negative forces in our economy right now, or a business owner who just didn't have the wherewithal to defend against a frivolous extended lawsuit. Or, it might be the owner of a business hit with a fire or storm damage or flooding. It could be someone who never finished high school and who couldn't compete in today's job market.  It might be a person with an alcohol or drug problem.  Then again, the bankruptcy filer could be someone who inherited a fortune and then blew it all.
 
In close to twenty five years of guiding my Indiana bankruptcy clients through the legal process of bankruptcy, I've seen all these situations.  I think sometimes that, as long as there are people, there will be some who achieve super-rich status and others who find themselves turning to the bankruptcy court system for help.  Truly - it could be anybody!

With no fewer than twenty four airlines having stopped service or actually having filed bankruptcy in just the past six months, the question on many minds has to be “So what about my frequent flier miles?”  Although, as a bankruptcy lawyer in Indiana, I’ve handled filings for tens of thousands of individuals and companies, none of them has been an airline.  Still, having practiced bankruptcy law for so many years, and having helped write the most recent changes to Indiana bankruptcy law, I can offer an answer to the question about frequent flyer points and airline tickets, and I don’t think you’re going to like that answer.

First of all, despite an airline’s PR to the effect it will honor all tickets and continue to operate, it’s really up to the bankruptcy court to decide whether that airline be be shut down and liquidated or continue to operate. If a bankruptcy airline is taken over by another airline, tickets may or may not be honored by the new owner.  And, if an airline is shut down by the bankruptcy court, mileage credits will be worthless.  (See, I warned you - you wouldn’t like the answer!)

Essentially a ticket holder is an “unsecured creditor” of the airline.  The first creditors to get paid in a bankruptcy are the secured creditors.  Those secured creditors might include an aircraft leasing company or a read estate lender.  The reasoning is that those loans are backed by assets that can be sold to satisfy the debt.

You might remember from former bankruptcy blogs of mine that there are different kinds of business and individual bankruptcy.  If an airline filed Chapter 11 reorganization bankruptcy, that means they have a proposal being considered by court to keep operating and to repay their debts over time.  If the company succeeds in getting its plan approved and then keeping up with the repayment schedule, your tickets and even your frequent flyer points might be safe.

In an ideal situation, I can help my business owner clients continue to operate their business and successfully execute their repayment plan.  In all situations, whether the company is liquidated or continues to operate, the bankruptcy safety net is designed to help business owners get a fresh lease on their business livesl
 

In “Rich Famous, and Stars of Prime Time”, a recent U.S. News and World Report discussed Oprah’s success and quotes Oprah herself: “If there’s a thread running through each show we do, it’s that ‘You are not alone’.” Reporter Amy Bernstein comments, “It is OK for Oprah’s viewers …to share their pain with her and to divulge their weaknesses because there is nothing she has not seen…”

As a bankruptcy attorney in Indiana for almost twenty five years, I hope to bring that same message to my bankruptcy clients and blog readers.  It’s absolutely true – it’s OK to share your pain and divulge your weaknesses because there’s nothing (at least it seems that way to me) I have not seen or heard in the area of finances and debts and the legal issues surrounding debts.  I like to say I’m in the “fresh start” business, helping my clients  focus on the future, on “What’s next?”, instead of focusing on regrets about the past.  And, whether it’s about foreclosure issues, or car repossession, individual bankruptcy, small business bankruptcy, or student loan debt, the message is the same – let’s focus on the “now” and on the future.

The magazine story says that “For Oprah, Martha, and the Donald, their first names are enough.”   Well, I know that even both names of Mark Zuckerberg aren’t enough for instant worldwide recognition, but that’s just fine.  My professional life is devoted to working at bankruptcy court and counseling tens of thousands of people in my offices around the state of Indiana, very far from the Silver Screen and the Golden Stage.  But my messages – they’re right up there along with Oprah’s:  “YOU ARE NOT ALONE.” And “THERE IS HELP’. 

As I’ve often remarked in this bankruptcy blog, it can happen to anyone. Medical problems combined with job loss can be difficult to overcome, even for very fiscally responsible folks.  And when falling real estate values make it impossible for a family to cut costs by downsizing – that can be a recipe for financial disaster.

As a bankruptcy attorney in Indiana for many, many years, I‘m an avid reader of news. I need to know all I can about the economy in order to offer advice about financial decisions.  On quite a few occasions, I’ll see a feature about some celebrity undergoing financial difficulties.  Interesting – I never, ever derive satisfaction out of hearing that some once very successful and very wealthy person has fallen on hard times.  Quite the contrary.  I of all people know how quickly fortunes can turn.  The only reason I pass on celebrity stories to my bankruptcy clients and to my readers is so people will know they are not alone.

When I read recently that eighty-five year old Ed McMahon (Johnny Carson’s sidekick for so many years) is in danger of losing his home to foreclosure, I didn’t ask “How could that happen?”.  I understood only too well.  A year and a half ago, I remembered reading, McMahon had his neck broken in an accident, and needed to quit working for American Family Publishers Clearinghouse sweepstakes.  With what I imagine are enormous medical bills to pay and severely reduced income, McMahon fell behind on his mortgage payments.  Yes, I know we’re talking about a multi-million dollar mansion, not an ordinary home.  But the story – it’s the same as with millions of other homes right now.  The McMahons’ home has been up for sale since the accident, but it hasn‘t sold.  The McMahons are caught in the same real estate crunch that’s affecting so many, many other families.

There is one very important detail in the Fox News story I read about McMahon.  According to his spokesman, McMahon has been in discussions with his lender to resolve the situation.  Whatever the outcome of those discussions, I want my readers to pay attention to this point: No one should allow a foreclosure to proceed without having a professional at least attempt negotiating with his or her lender.  In fact, this is a crucial part of the work I do with clients facing foreclosure or bankruptcy.  And the earlier in the process we start, the better chance we have of reaching some sort of settlement.

My thoughts and good wishes are with the McMahons as they go through this difficult time in their lives.  Meanwhile, the two thoughts I want to share with my Indiana bankruptcy clients are these:  “Get help.”  and "You’re Not Alone!”

Pets probably wouldn't understand, but the rising cost of wheat and corn can change a very pleasant pet existence into a dog's life!  Added to the increased cost of food for the human household members, rising costs of cat or dog food can present a real problem. In one of my earlier bankruptcy blogs, I introduced readers to a sad new moniker - "foreclosure pets".  These are animals left behind in homes abandoned by foreclosure, or pets dropped off at already over-crowded animal shelters because of foreclosures.  Much as people love their pets, sometimes they have to choose between keeping their family's basic bills paid and paying for dog or cat food and medical care.  In the confusion and desperation over losing their home, people often believe city officials or perhaps bank representatives will rescue their pet. Unfortunately, this is almost never the case. 

It would be easy to condemn such cruel treatment of pets, but as a bankruptcy attorney in Indiana for almost twenty five years, I know that most home foreclosures don't happen  because deadbeat homeowners have neglected their obligations.  Typically a foreclosure is at the end of a chain of troubles that began with unemployment due to a layoff, or with an expensive medical illness in the family, or some combination of unforeseen factors like those.  When everything seems to be falling apart for you and your family, it's hard to focus on the fate of your pets.  Sometimes, there are very harsh realities to deal with.  For example, many former homeowners need to rent apartments, and many apartments don't allow pets.  The pet problem is very widespread. Just about every city's animal shelter reports being under enormous strain.  Mark Kumpt of Dayton, Ohio's Animal Resource Center, summed up the sad situation: "These animals are the second class of victims in the national economy."

I've often repeated the importance of seeking professional help at the first signs of financial trouble.  I find in my bankruptcy law practice that, the earlier in the process debtors seek my help, the more options will be available to them in terms of negotiating with lenders to try to keep their home.  Even if foreclosure becomes inevitable, with more time to plan, there is a greater chance of finding a place to live where the pet can move with the family.  At the very least, there could be time enough to find someone to adopt the family pet.  But what I think is most important to keep in mind, when families are going through times of trouble, their pets can be of great comfort to them.    Long, long after the legalities and complexities of bankruptcy or of foreclosure proceedings are over, the unconditional love of a loyal pet won't have changed by a hair!

To a financier or an IRS agent, the word "forgiveness" has a technical meaning.  When a debt you owe is "forgiven", you don't need to repay that loan (and you may owe income pay tax on that benefit).  In the bankruptcy process, certain debts may be "discharged", which means the person filing bankruptcy is excused from repayment of all or part of those debts.  Working as a bankruptcy attorney in Indiana for more than twenty years. I deal with the discharging of debts every day.  But, what I find so interesting and important about it all is this: While there may be a lot of discharging of debts going on around bankruptcy courts, what I'd really like to see a lot more of is forgiveness going on around bankruptcy clients and their friends, families, and associates. 

As you might imagine, by the time my clients come to see me about filing a bankruptcy case for themselves and possibly for their small business, they are under considerable strain. They haven't been sleeping very well, so they're not feeling very healthy or energetic. They are not in a very good state of mind to be making the kind of crucial decisions I'll be discussing with them.  In many cases, people cast blame.  There's a lot of blame put on spouses, on parents, on children, on partners.  Even worse, many bankruptcy filers expend energy blaming themselves for their situation.  None of this blaming helps the situation.  Trust me on this - I've counseled with tens of thousands of debtors from all walks of life - blaming always hurts, and it almost never helps.

Dr. Phil published Ten Life Laws.  Life Law #9 is, "There Is Power In Forgiveness".
Dr. Phil explains that hate, anger, and resentment are destructive, eating away at the heart and soul of the person who carries them."  He goes on to say, "Forgiveness is not about another person who has transgressed against you.  It's about you."

Recently, the Oprah Show featured the Forgiveness Project, a new charitable organization dedicated to the idea that "by listening to the voices of people who have experienced reconciliation and renewal, it is possible to see alternatives to endless cycles of violence, crime, and injustice in the world".  When it comes to the bankruptcy process, as I've often stressed in this bankruptcy blog, it's the "Now what?" part of the process that really matters, the part where people rebuild their financial lives.  By forgiving others - the government, the weather, the war, the partner, the spouse, and, most of all, forgiving themselves, people emerge from bankruptcy stronger than ever, eager to write "the rest of the story." Holding on to blame and resentment keeps people in the same old story forever.

When it comes to cars and trucks, it seems bad news has been wheeling into Indiana in force in recent months.  In the past two weeks alone, I found two rather pessimistic items in my issue of the Indianapolis Star having to do with vehicle manufacturing.

 First, Navistar announced it was temporarily closing its diesel engine plant on the east side of Indianapolis, which means 500 workers will be idled, and will receive paychecks 30% lower than normal during the time the plant is closed.  As a bankruptcy attorney in Indiana who reads and listens to news very carefully, I understand that sales of pickup diesel trucks have fallen as the price of diesel fuel has risen. Many people who had used pickups to tow RVs are cutting back on this type of travel. I also understand that even temporary layoffs will mean that hundreds of families are going to have a very hard time keeping the bills paid. 

The second bad news item I caught in the Indianapolis Star had to do with Ford Motor Company. The automaker announced it no longer expects to reach profitability in 2009.  Like Navistar, the company was hit with greatly reduced demand for pickups, plus SUV sales are way down with higher gas prices. And, like Navistar, Ford announced job cuts, including jobs for both white-collar and hourly workers.  Once again, I'm especially alert for employment news.  Job layoffs are one of the main causes of bankruptcy, along with medical bills and divorce problems.

In a happier twist, the Star had news about a third auto company, GM.  One of GM's plans in Pittsburgh is closing, and some very expensive large equipment from that plant is set to be moved here to a stamping plant GM has on the west side of Indianapolis.  This Indianapolis plant has cut its production in half in recent years, and the transfer of equipment could mean new life for this 2.1 million-square foot plant.  I am very, very interested in the fate of this GM plant.  There are still 900 workers there (down from 5000 in the 1980's), and to me that means 900 or more families might be given more of a chance to keep up financially.

In an earlier bankruptcy blog, Yet More Good News In Indiana, I explained that a healthy job market in our state is a very important factor in the work I do with bankruptcy clients.  The ability for a Hoosier to get a new job after a layoff, the opportunity for a single moms to reenter the work force following a divorce, and the chance for families to stay in their homes and avoid foreclosure - all these things depend on the employment market in our state" wheeling" along!   

Bringing you up to date on the ATA bankruptcy hearing, I emphasized how bankruptcy is a process with certain stages.  By now you know that, as a small business bankruptcy attorney, I need to stay on top of news about businesses in various stages of that process, so as to offer the most up-to-date legal and business advice to my Indiana bankruptcy clients. 

Three business stories from just the past week or two illustrate what I mean by "bankruptcy process".  The first story is about a 175-year old company called American LaFrance, or ALF, which is one of the oldest fire and emergency service vehicle companies in the U.S.. (One observation to make here  is that even very old and solid companies sometimes need to make use of the bankruptcy system.)  The bankruptcy court judge entered an order confirming ALF's Chapter 11 Plan of Reorganization, which means the company can emerge from bankruptcy.  ALF was "in bankruptcy" for less than 17 weeks. In an earlier bankruptcy blog I explained that the bankruptcy law is designed to treat all parties fairly. In the ALF case, 90% of the creditors supported its plan.

In Virginia, Movie Gallery, Inc. successfully emerged from Chapter 11 bankruptcy protection after restructuring its debt.  Movie Gallery, started with 97 stores thirteen years ago, is now the second largest North American video rental company in the country.  "Through this restructuring," explained the company chairman, "we have effectively addressed our financial and operational challenges."  In practical terms, all of Movie Gallery's existing common stock and bonds were cancelled, and under the bankruptcy plan, new common stock and bonds are being issued to unsecured creditors of the company.  Again, bankruptcy is a process.

Meanwhile, In Delaware bankruptcy court, Hilex Poly Company, the world's largest plastic bag company, announced an agreement with its creditors under a "voluntary" Chapter 11 reorganization plan. This means the company can continue to operate as usual while the debt restructuring is in process.  In this case, all obligations to customers could be fulfilled, and suppliers could be paid in full.  The mechanism used in this case was special financing from GE Capital and Morgan Stanley.  Once more, a process was put into play.

My work as a small business bankruptcy attorney in Indiana is to help each bankruptcy client business owner move through the process as smoothly as possible by adopting strategies that are best for that business, and then carrying through step by step towards a successful fresh business start.
 

A couple of months ago, I wrote about the ATA Airlines bankruptcy that completely shut down the company.  As a small business bankruptcy attorney in Indiana, I have an intense interest in stories about bankruptcy filings by Indiana companies.  As I counsel my small business bankruptcy clients, it's important to draw lessons from other companies that can help my clients avoid mistakes as they rebuild their businesses. Then, too, any time a company closes its doors, my individual bankruptcy clients can be affected.  Some may be laid off because they worked for ATA or perhaps for a company that was a supplier or customer of ATA. The decrease in employment opportunities will have an effect on how quickly my clients can get back on their feet financially following a personal bankruptcy. 

Here's the situation right now with ATA:  At the end of last month, a 341 meeting was held.  This is a special meeting, part of all bankruptcy cases, at which executives of the company are questioned about what caused the company to fail.  In my work as a bankruptcy attorney in Indiana, I am involved in the bankruptcy process.  I use that word "process" by design, because, despite the myths, bankruptcy is not a one-day "event", but an orderly legal process with different stages.  I was personally involved in drafting changes to the Indiana bankruptcy statutes, and I know that the process, while certainly not perfect, is designed to have the courts arrive at as fair a settlement as possible.  That means trying to be fair to both the business owner(s) and the creditors who are owed money.  It also means, in many cases, trying to "save" a business and allow it to continue to operate to retain as many of its workers as possible, and to serve its customers.

The ATA story is an especially sad one, in a way, because the company was founded right here in Indianapolis thirty-five years ago.  Many attempts were made to keep the company going.  These strategies included selling ATA to Georgia-based Global Aero Logistics, and taking on government contracts to transport troops. Then, along with other airlines, ATA was hit with spiking fuel prices.  When it lost its government contracts, the airline simply could not keep going. 

I think one lesson small business owners can learn from ATA is to start working on strategies at the very first signs of trouble.  Sometimes a sale or merger can improve the situation dramatically.  With ATA, it just wasn't enough.  When consumer travel began to fall off, ATA diversified into other areas of business, another good lesson for all small business owners.  Again, with ATA, it just wasn't enough. Adverse market conditions just proved too strong for the company to keep flying.  And that's exactly where the Indiana bankruptcy process comes in as a safety net.